- business families take time for the family, discuss critical issues openly and come to an agreement about them, which can lead to a family constitution
- business families give priority to the conditions under which family members can enter operative business or consultative bodies and the criteria for the qualifications of leadership successors; outside management should not be a taboo subject in this respect
- family members address and process emotional conflicts appropriately – in other words, the members of a business family are keen to improve the culture of how they interact with one another
- business families work together (ideally during ‘good times’) to draw up rules on how to constructively deal with conflicts so that they do not escalate
- business families are vigilant about and address conflicts of both material and process natures, such as optimising processes and structures and openly negotiating the distribution of responsibilities in the family and company
- business families see the development of a family strategy as a joint responsibility, and they embrace and proactively address material conflicts about this topic
- each family member is alert to indicators that conflicts within the business and between family and/or non-family members may turn into relationship conflicts, escalate and become chronic
- each family member asks themselves, in the event of a conflict, whether they can put themselves in the shoes of the other and understand their motives for acting the way they do
- an outside perspective of events is regularly sought in conflict situations. Anger makes you blind. A constructive question could be: ‘Is what is happening now – something old or something new?’ If it is a ‘stuck record’, then one might ask: ‘What would a new and unexpected action be for each of those involved?’
- an external moderator is appointed (who is not connected to the business or the family) when it becomes clear at a certain point of escalation that the conflict can no longer be satisfactorily resolved
- the shareholder agreement includes ‘conflict clauses’ that clearly regulate the way conflicts are dealt with
CRISES & CONFLICTS IN FAMILY BUSINESSES
When it comes to crises and conflicts, the focus is on the dynamics and interactions between family and company. But an equally important question is how can a family trigger company crises, and how can a family and company become resilient to external crisis factors (such as changes in the market and competitive dynamics)? How can the interests of the company and those of the family intelligently be brought into balance?
(Video available in German)
CONFLICTS IN FAMILY BUSINESSES
Family businesses are more likely to experience conflicts, and there is a greater risk of conflict dynamics becoming very severe. Nevertheless, conflicts are unavoidable. They are part of everyday business, and they encourage the continuous development of working procedures; thus, they should not be considered wholly negative. Conflict management as a leadership challenge means recognising destructive conflicts early on, dealing with them constructively and, above all, preventing them from solidifying and becoming chronic. This is especially important in family businesses, since they entail enormous complexity for everyone involved due to the overlapping systems of family, company and shareholder groups. One of the reasons for this is that different groups of people can quickly become drawn into conflicts and can contribute towards the dynamics of escalation through their interactions in various situations.
The WIFU has been researching this topic for some years, as it is crucial to the ability of family businesses to survive. Certain factors have emerged that appear especially relevant in the context of family businesses.
CRISIS DYNAMICS AND CRISIS MANAGEMENT
A crisis can mark a turning point in the corporate development process. Crises are as much a part of entrepreneurship as success. Every company faces potential threats to its existence from dynamics in the market and rivals. Family businesses are often subject to an additional threat as a result of the family factor.
It determines the company crisis, which often results from escalating conflicts in the owning family. As a general rule, a crisis in a business will be accompanied by parallel and comparable crisis processes in the proprietor family.
If a crisis in a family business is to be resolved while the existing owners remain, it is essential for the crisis dynamics that are happening simultaneously in the business family to be examined as well. In this context, an appointed restructuring and financial recovery team must consider a wider approach to crisis management.
THE WITTEN CRISIS MANAGEMENT MODEL
As well as the conventional aspects of crisis resolution, the specificities of the family factor must be considered. The WIFU has developed its own crisis management model for this.
If the family factor has a constructive influence on resolving crises, then it should be systematically used; but if it is destructive, then it needs to be ring-fenced by specific measures as part of financial recovery. As well as restructuring and reorientation in the business, appropriate steps should be taken to organise the decision-making abilities of the shareholder group, to define a financial recovery strategy within the owning family and, if necessary, to constructively address the family conflicts that almost always occur in such situations.
LITERATURE (SELECTION AVAILABLE IN GERMAN)
- WIFU best practice guide: Otte, D. (2017): Konfliktmanagement in Familienunternehmen.
- WIFU essay series: Fabis, F. G. (2009): Konflikte in Familienunternehmen. Lohmar: EUL-Verlag.
- WIFU essay series: Freysoldt, T.-A. (2013): Der Beirat in der Krise. Göttingen: V&R Verlag.
- Book: Rüsen, T. (2011): Familienunternehmen erfolgreich sanieren. Der Einfluss des Familienfaktors bei Restrukturierungen. Berlin: Erich Schmidt Verlag.
- Book: Rüsen, T. (2017): Krisen und Krisenmanagement in Familienunternehmen: Schwachstellen erkennen, Lösungen erarbeiten, Existenzbedrohung meistern. Wiesbaden: Gabler Verlag.
- Article: Rüsen, T. (2012): Krisenmanagement in Familienunternehmen unter Berücksichtigung des Familienfaktors. In: Krisen-, Sanierungs- und Insolvenzberatung (KSI), Vol. 8, pp. 147-156.
- Article: Rüsen, T. (2011): Unternehmerfamilien ohne Familienunternehmen – Konsequenzen beim Verlust eines imaginären Familienmitgliedes. In: Schindler, H. et al. (editors): Systemische Horizonte. Göttingen: V&R Verlag, pp. 209-219.
- Book: Rüsen, T. (2008): Parallele Krisenprozesse – paralleles Krisenmanagement: Das Familienunternehmen unter existenziellem Druck. In: Schlippe, A.v. et al. (editors): Familienunternehmen verstehen. Göttingen: V&R Verlag, pp. 42-54.
- Article: Rüsen, T.; Großmann, S. (2014): Ein Familienstrategieprozess als Konfliktlöser in Familienunternehmen? In: Konfliktdynamik, Vol. 3, No. 4, pp. 332-339.
- Article: Schlippe, A.v. (2012): Konflikte und Konfliktdynamiken in Familienunternehmen. In: Familienunternehmen und Stiftungen (FuS), Issue 2/2012, pp. 43-48.
- Book: Schlippe, A.v. (2014): Das kommt in den besten Familien vor… Systemische Konfliktbearbeitung in Familien und Familienunternehmen. Stuttgart: Concadora Verlag.
- Article: Schlippe, A.v. (2018): Streit als Wertevernichter – Wie kann er vermieden werden? In: Ebel, K. et al. (editors): Familienunternehmen: gestern, heute, morgen. Festschrift for Peter May on his 60th birthday. Hamburg: Murmann, pp. 246-251.
- Coping with crises in family businesses
- Crises and conflicts in family businesses
- Stakeholder crises in family businesses
- 07.11.2019: 59th Family Business Forum
‘Emergency toolkit for business families and family businesses’
Hosted by BLANCO GmbH & Co. KG, Oberderdingen